Russian ETFs traded lower on Monday following the anything-but-surprising victory by Vladimir Putin to a third term as Russia's president. Already Putin has received threats from his opposition that he will not fulfill his full six-year term. The New York Times reported international observes to Russia's election have alleged fraud.

Welcome to life inside Russian politics. Corruption, fraud and related fare are just part of the game when investing in Russia, but the rewards can be considerable. For example, the Market Vectors Russia ETF (NYSE: RSX) is up more than 23% year-to-date. Russia is the world's seventh largest emerging market by market capitalization behind China, Korea, Taiwan, Brazil, South Africa and India, according to S&P Capital IQ.

In a note out today, S&P global equity strategist Alec Young said: "One country where we see room for further long-term growth, supported by improving fundamentals and very low valuations, is Russia, although we believe the risks tied to the market remain high."

Young believes Russia's valuation is extremely low due to weak property rights laws and a general perception of a lack of political and financial transparency. Specifically, Young notes that Russia trades at only 5.8 times 2012 consensus EPS versus 10.8 times for the broader MSCI EM Index. Meanwhile, Russia's price to book ratio is only 0.8 times versus 1.5 times for the MSCI EM, suggesting to us that concerns are already discounted in the asset class's very low valuation, according to the note.

The Market Vectors Russia ETF is the oldest and largest Russia ETF with $2.2 billion in assets under management, but the ETF is not rated by S&P. RSX faces competition from the iShares MSCI Russia Capped Index Fund (NYSE: ERUS) and the SPDR S&P Russia ETF (NYSE: RBL), neither of which are rated by S&P.

"However, we note that Market Vectors has announced a change in the index that supports RSX that will go into effect after the close on March 16, with the Market Vectors Russia Index replacing the DAX Russia Global Plus Index. After speaking with Market Vectors, we believe the enhanced liquidity filters that the new index uses (higher trading volume and market capitalization of securities) and the addition of offshore names that generate 50% or more revenues from Russia, will result in some turnover of the ETF but better track the investible Russian market. But according to Market Vectors, the number of securities and the exposure to the top-10 securities is unlikely to change much," S&P said in the note.

S&P does have a Marketweight rating on the SPDR S&P BRIC 40 (NYSE: BIK). BIK has over $397 million in AUM and its two largest holdings are Russian firms, but Russia accounts for less than 28% of the ETF's country weight and RSX has sharply outperformed BIK on a year-to-date basis.

Investors looking for a multi-country ETF that is Russia heavy should consider the SPDR S&P Emerging Europe ETF (NYSE: GUR). Russia accounts for 63.55% of GUR's weight and the the ETF has slightly outperformed RSX this year.